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A retrial of a $400 million royalty lawsuit against South San Francisco biotech giant Genentech Inc. will focus again on the issue of who should profit from research that leads to genetically engineered medicine. The lawsuit filed by Duarte, Calif.-based City of Hope Medical Center claims Genentech hid 27 licenses with drug companies to avoid paying royalties from drugs used in the production of human insulin and growth hormones. The first case ended in a mistrial in October after the jury said it was split 7-5 over whether Genentech owed $340 million plus interest to the research hospital. Jury selection is scheduled to begin today, with opening arguments possibly later in the week. The case is indicative of growing pains within the lucrative biotech field. In the past, researchers got much of their funding from the government. But now that their research is seeing new uses in the growing biotech industry, they are finding themselves embroiled in more and more lawsuits over patents and royalties. At issue is a 1976 agreement drafted years before anyone knew it would be worth billions of dollars. The agreement promised City of Hope a 2 percent royalty on drugs produced by Genentech or a firm licensed by Genentech. The hospital said it discovered that Genentech was hiding licenses to avoid paying royalties. Genentech countered that City of Hope misread the contract or, worse, brought the lawsuit because it feared the end of royalty payments when the patents expired. “The evidence is the same, the claims are absolutely the same,” Glenn Krinsky, an attorney representing City of Hope, said. Genentech said it also would not change its strategy. “We still firmly believe that we honored our side of the agreement and compensated City of Hope fairly,” Sabrina Johnson, a Genentech spokeswoman, said. “We don’t have any plans to change our trial strategy based on the outcome of the last trial.” Copyright 2002 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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